US president’s tariff threats hit European automakers

BERLIN

US President Donald Trump’s tariff threats hit European automakers, as Europe Stoxx 600, the automobile and parts index, fell to a two-week low by 4.1%, while the shares of automakers followed.

Volkswagen, Volvo, Daimler Truck, Porsche, and BMW shares all fell over 5%, while French auto parts provider Valeo’s stocks declined nearly 8%.

Germany’s DAX 40 index ended its incline to a new record as trade wars fueled, falling 2% earlier on Monday.

Throughout his presidential campaign, Trump made promises to impose additional tariffs on products from Canada, Mexico, and China on day one. He signed a slew of executive orders on his first day in office, though he did not deliver on his promise as early as he had said.

On Saturday, Trump signed an executive order to impose additional tariffs of 25% on Mexican and Canadian imports and 10% on Chinese goods.

Trump threatened the EU with tariffs, citing a trade deficit with the US.

Analysts say that around $8.2 billion of Volkswagen revenues and about $16.4 billion of Stellantis revenues will be affected by Trump’s tariffs.

Mexico, Canada’s auto production

Canada and Mexico produce around 5.3 million light vehicles, 70% of which is sold to the US market.

Most vehicles produced in the US use parts from Canada or Mexico, which means that tariffs on these components will increase vehicle costs in the US.

The US reportedly imported around 3.6 million light vehicles from Mexico and Canada in 2024, accounting for 22% of all vehicles sold in the US.

Mexico is the largest source of light vehicle imports to the US, topping Japan, South Korea, and the entire Europe.

The tariffs can affect the earnings of large auto manufacturers operating in North America. Ford and General Motors have been producing vehicles in Canada and Mexico for nearly a century now, and Volkswagen has been conducting operations in Mexico since 1967.

Other carmakers, such as Nissan, Stellantis, Honda, Toyota, and Hyundai are also expected to be hit by Trump’s tariffs.